“Home affordability” is a difficult metric to nail down as it constantly shifts in response to fluctuating home prices, borrowing costs, wages and ancillary homeownership costs.
In August, for example, annual gains in wage growth of 3.2%, as tracked by the Mortgage Bankers Association, outpaced annual growth in median purchase application payments of 2.1%, reflecting a net 1.1% improvement in homebuyer affordability.
But even economic trends supporting improved affordability, such as higher inventory levels and declining mortgage rates, take time to filter through local, regional and national housing markets, anticipating the arrival of improved affordability in the future.
Simultaneously, shifts in home affordability carry different impacts on different segments of the purchase market. Softening home prices may help borrowers struggling to save downpayments funds, while surging insurance costs have had outsized impacts on the homebuying behaviors of younger borrowers.
In aggregate, however, home affordability deteriorated from the second quarter to the third quarter of 2025 across almost half of U.S. counties with data sufficient to analyze — 99% of which were already less affordable compared to their historical average.
Of the 580 counties analyzed in its newly released Q3 2025 U.S. Home Affordability Report, 44.7% recorded worse affordability ratings in the third quarter than the second, says Attom, a real estate market analytics firm. The deterioration was driven by a record-high national median home price of $375,000, which rose 2% quarterly and 4.8% annually.
“The drop in mortgage rates will help some buyers keep pace with the rising cost of homes,” commented Rob Barber, CEO of Attom, in a press release. Falling mortgage rates may not be the affordability boon that the market hopes it will be, he warns, as “the more favorable loan rates could also enable prices to keep rising.”
Median home prices rose faster than the typical resident’s wages in roughly 50% of the counties analyzed, a jump from the second quarter when home prices outstripped wage growth in only 34.9% of counties.
Attom determines affordability for average wage earners by calculating the amount of income needed to meet major monthly homeownership expenses — including mortgage payments, mortgage insurance, property taxes and homeowners insurance — on a median-priced single-family home and condominium, assuming a 20% downpayment and a 28% maximum “front-end” debt-to-income ratio.
In 79% of the counties Attom analyzed, homeownership expenses exceeded 28% of a typical resident’s wages, rendering homeownership unaffordable by standard guidelines.
Nationwide, the typical monthly cost of mortgage payments inclusive of homeowners insurance, mortgage insurance and property taxes was $2,123 in the third quarter, essentially flat from the second quarter but 6% higher year over year.
In 34.3% of the counties analyzed by Attom in the third quarter, home expenses on a median-priced home exceeded 43% of typical wages, a benchmark considered seriously unaffordable.
